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Historic market turbulence in the third quarter tested investors’ nerves, but some of Wall Street’s biggest companies are reaping their best earnings in years, capitalizing on wild fluctuations in various asset classes. For the first time in 80 years, the S&P 500 suffered a quarterly loss after rising more than 10% at one point, according to Bespoke Investment Group. Meanwhile, crazy moves are also being seen in bond yields, currencies and commodities as the Federal Reserve reaffirmed its commitment to raising rates in its battle against inflation. Extreme volatility is especially good for macro players who bet on political and economic events. Ray Dalio hedge fund Bridgewater is close to posting its best year since 2010, with its Pure Alpha II fund up 32.7% through Sept. 23, according to a person familiar with the firm’s performance. Citadel is also having a stellar year, with its flagship multi-strategy fund, Wellington, up more than 25% by the end of August, according to a person familiar with returns. Bridgewater and Citadel executives have expressed their views on the path of central bank tightening and their economic outlook in recent public appearances. At the CNBC Delivering Alpha conference in New York on Wednesday, Ken Griffin, founder and CEO of Citadel, said he believes the Fed still has a lot of work to do to bring inflation down even after a series of big rate hikes. He added that there could be a chance for a recession next year. At the SALT conference in mid-September, Bridgewater CIO Greg Jensen said that the belief that inflation will eventually normalize to about 3% is too optimistic. The well-known strategist said he expects price pressure to remain “stubbornly higher than the market expects”. Steady inflation coupled with slower US growth will continue to put pressure on asset prices, Jensen said. Asked where to invest right now, Jensen said Latin America and commodities look relatively attractive. Dalio recently issued a pessimistic warning to the markets, predicting that a policy of keeping interest rates high to curb inflation could tumble stock prices by 20%. Tech investors buy the dip While macroeconomic players have taken advantage of the market turmoil, tech investors have suffered big losses this quarter on the back of rising rates. Kathy Wood’s flagship ARK Innovation ETF lost about 4% in the third quarter, experiencing its fifth consecutive negative quarter. The innovative investor has been busy basking the market down by snapping up shares of its tech favorites during the sell-off, including its two biggest holdings, Roku and Zoom Video. Preparing for the fourth quarter Markets are suffering from growing economic uncertainty and geopolitical risk in the fourth quarter. Among Wall Street analysts’ favorite stocks in the fourth quarter is the name of a casino that could double. term bonds in this volatile market The fourth quarter is now entering and it does not look good for the economy Altimeter Capital CEO Brad Gerstner is also having a tough year. Some of his best assets have suffered heavy losses. Microsoft fell over 8% in the third quarter and Meta Platforms lost 15%. However, Snowflake and Uber recovered during this period. In mid-September, Gerstner announced a new position at Tesla, betting on an industry leader amid the global trend towards car electrification. Value Investors Didn’t Give Up Some of the biggest value investors were also busy during the Fed-instigated stock crash. Leon Cooperman said he is having a “decent” year compared to the major stock indexes and is finding many attractively priced individual stocks. The Omega family office CEO said he is lowering his expectations as investors are still stuck in a bad environment. Warren Buffett’s Berkshire Hathaway bought more shares of Occidental Petroleum this week, continuing to increase its huge stake as the legendary investor remains unfazed by falling oil prices. Berkshire’s stake in Occidental has reached 20.8%. The rate has risen steadily over the past few months. In August, Buffett’s firm received regulatory approval to buy up to 50%, prompting speculation that it could eventually buy the entire Houston energy company.
Credit: www.cnbc.com /